Sandwiches, made with Savage River Inc. Beyond Meat breakfast sausage, are seen during the inauguration of the company’s Manhattan Beach Project Innovation Center in Los Angeles, California, U.S., on Thursday, July 19, 2018. The new 26,000 square foot facility is part of the company’s ongoing initiative to bring the best scientists, engineers, cutting-edge research, food technologists, chefs, and researchers together to create meat directly from plants. Photographer: Tim Rue/Bloomberg

In 2013, Tesco’s supermarket chain in the United Kingdom had a tainted meat scandal in which horse meat was found in some beef burgers sold in the UK and Ireland. Since that time, there has been an increased awareness by consumers who are demanding to know the provenance of their food. On top of that is the concern over the environmental impact of the farming industry and its effect on climate change.

The report estimates that will be around €1 billion investment in what they call ‘next generation’ food tech companies. Since 2013, there has been a 63% annual growth in investment in ‘next gen’ with 1,241 companies and next generation of food tech entrepreneurs are focusing on the 99% – reinventing agriculture, food production and consumption.

Yaron Hadad, Chief Scientists and Co-founder of Nutrino, an AI-driven personalized nutrition platform said that changing consumer habits are bringing the legacy food industry to its knees.

Nutrino has raised $10 million from VCs, strategic investors and angels and created what they call FoodPrint technology which scores users’ meals by providing precise, data-driven insights on how specific foods impacts their unique biomarkers. Through their food database, Nutrino is collaborating with food industry partners to provide accurate nutrition data.

“As a new generation of consumers are demanding healthier food and accessible, accurate knowledge of how the food they eat impacts their health and industry disruptors are emerging to address this paradigm shift in consumer preferences,” said Hadad.

“We think that major food-makers need to take cues from innovators [..] or risk losing ground to health-minded disruptors,” said Hadad. “The key for big players such as Nestle, PepsiCo, Kraft-Heinz, Mars, and others will be to get to know their customers on a truly personal basis. Thus, they will need to focus beyond their bird’s eye view of broad consumer segments.”

“The future of food is in personalization, and legacy food makers will need a digital infrastructure to collect behavioral, lifestyle and health data about their customers in order to deliver a sustainable product line that can be tailored to each individual from both a health as well as taste perspective, while minimizing the impact on the environment,” added Hadad.

Niccolo Manzoni, Managing Partner, Five Seasons Ventures says that their firm has invested in cell-based and plant-based meat companies such as Impossible Foods, Beyond Meat and Memphis Meats. Their first investment from their fund was Tropic Biosciences, a company working with CRISPR technology applied to crops. Tropic Biosciences is a UK company that raised a $10 million oversubscribed Series A from five VC firms from the US, UK, China and Switzerland.

“Thirty-three percent of cropland is used for feed production, 26% of ice-free terrestrial surface is occupied by pasture and livestock production accounts for 14.5% of global greenhouse gas emissions, but what’s interesting for me here is that we are witnessing a perfect storm: demand is on the rise and supply is quickly catching up,” said Manzoni.

Manzoni says there is a demand pull.

“Consumers are asking for more and more plant-based food,” said Manzoni. “US plant-based retail sales grew 8.1% to $3.1 billion in 2017, while food sales overall decreased 0.2%. Specifically, plant-based meats grew at 6% over the past year, and now capture 2.1% of all retail meat sales, and that number is expected to be a $6 billion by 2022, expected to grow at 6.6% CAGR.”

“Supply is quickly catching up, food corporates are revamping their existing product portfolio in plant-based foods; we see a lot of startups put their energy into plant-based and cell-based meats; and retailers, Carrefour for example in France, is doubling their vegetarian range and plant-based alternatives by June 2019,” said Manzoni.

Richard Penfold, Partner, Intellectual Property, Withers Worldwide says that what’s interesting about the build-out of the food market away from animal meat, is that both cell-based and plant-based are bookends in the food tech world.

“Meatable, a spin out of Cambridge University and Stanford University, are creating meat from animal cells, cell-based meat, which means there won’t be a need to raise, farm and feed animals,” said Penfold. “Imagine the repercussions to the environment? Water waste and methane gasses would be a thing of the past. Cattle-breeding is taking a significant factor for these greenhouse gas emissions.”

A worker tests a Savage River Inc. Beyond Meat burger patty for texture during the inauguration of the company’s Manhattan Beach Project Innovation Center in Los Angeles, California, U.S., on Thursday, July 19, 2018. The new 26,000 square foot facility is part of the company’s ongoing initiative to bring the best scientists, engineers, cutting-edge research, food technologists, chefs, and researchers together to create meat directly from plants. Photographer: Tim Rue/Bloomberg

“On the other end of this new food market, plant-based meat like Moving Mountains. Would a vegetarian eat meat if it hasn’t been farmed or harmed and nothing has been killed in the process? If someone is a vegetarian for ethical reasons if that component was removed, would that movement end?” asked Penfold.

“Foodtech is not just about feeding more people with better food, but also about helping our ecology (both flora and fauna) by pursuing sustainability alongside our increasing demands for certain foods many people love from time to time,” said Carlos Espinal, Managing Partner, Seedcamp. “As one of the biggest contributors to climate change is greenhouse emissions, what’s interesting is how many of those emissions come from meat and meat by-products.”

Espinal says that consumers increasingly want plant-based nutrition, for health and moral reasons, at the same time retain the convenience of comfort foods they’re used to. “There is also a large increase in flexitarian consumers looking for an alternative,” said Espinal.

Because of that demand, Espinal said that Seedcamp recently invested seed funds in a yet to be launched plant-based food company by the two co-founders of Chosen Bun, Andy Shovel and Pete Sharman who sold Chosen Bun in 2016. The new startup will offer plant-based food – chicken, bacon and beef – meat eaters will like. According to Espinal, the new startup is planning to launch in Q1 2019.

Making the shift from selling tonnes of meat a month with Chosen Bun, Shovel says he realizes that it is an atypical journey to create a plant-based meat-alternative brand.

“Meat-free products that require absolutely no change in recipe or eating experience. That’s what we’re shooting for,” said Shovel.

“The bottom line is that there is room for more than one solution to the protein issue,” adds Manzoni.

But in the food industry, Hadad says that there are three domains where making data-driven decisions can be transformative: food development, personalization, and sales.

“Adapting to the changing needs of an individual and predicting the impact of food on one’s pocket, stomach and taste buds is only possible through the use of AI,” said Hadad. “Solutions using AI range from personal recommendation engines to personalization of product lines. Imagine your favorite cereal box, individually crafted for you with the ingredients that affect your body best and the flavors that you enjoy the most that are enriched with the supplements you need to address your current health status.”

“Taking this idea even further, in the future, “food as medicine” may be food enriched with the medicine you need if you happen to be sick,” adds Hadad.

Nutrino uses AI to digest information on millions of foods worldwide from certified food sources to create an ontology of foods with dozens of layers of data.

“We use machine learning to understand everything about each type of food, from the ingredients they are composed of, to nutritional info with hundreds of nutrients, dietary needs, allergens, textures, flavors, cuisines, prices, geo-availability and much more,” said Hadad.

“Our AI models find patterns and insights relating eating habits, lifestyle info and physiological information (the latter coming from wearables, medical devices, electronic medical records and more) to create a digital food “fingerprint” of how the food you eat affects your body,” said Hadad. “The massive amounts of information are very hard (if not impossible) to analyze manually, and AI is making this possible for the first time in history. “

Hadad says the company also uses AI to facilitate food tracking and allows people to capture the food they eat using image recognition, voice recognition and other AI-based methods.

Blockchain and Food Security

Within a year of the2013 Tesco scandal, there was an upswing in consumers wanting to know where their food came from. The tainted meat scandal created a consumer desire for authenticity.

A London-based non-profit,Project Provenancecreated a platformthat uses blockchain to establish an authenticated food chain with information gathered collaboratively from suppliers all along the supply chain. Their platform substantiates product claims with reliable, real-time data. With alicensing model in place, stores can license the platform while their app gives consumers the o track where the meat came from and follow its path to the stores.

“This is where blockchain becomes so interesting, rather than become something consumers can’t understand or see, or just relegated to crypto, in the case of food security, it becomes a part of the marketing budget,” said Penfold.

“The accepted test bed for blockchain has been aligned with crypto, but food provenance is a market that affects everyone from the farmer to the slaughterhouse or the processing facility to packing and delivery. It has not been secured and a result, people took advantage of that,” said Penfold. “Blockchain can show everyone in the value chain where the food came from.”

Penfold says blockchain can also be applied to any industry where there are raw materials that end up in the consumer’s hands.

“If we look at the fashion industry, the chain of manufacturing back to the sourcing of materials. Whether it is Chanel or Primark, no one knows every step in the chain, and that includes growing the cotton and who’s picking it,” said Penfold. “Using blockchain will take the consumer through the whole process — from growing,weavingand dying the cotton to sewing, packaging, distribution chain all the way to retail and it is on your back.”

Hadad says that consumers, and in particular millennials, strive for transparency around the products they buy.

“Over the last decade, a wellness trend has been emerging and is expected to grow over the decade to come, and the intersection of these two trends makes consumers very sensitive to the journey their food went through,” said Hadad. “People are asking questions like ‘how is this food going to affect my health, specifically, what ingredients, toxins, chemicals, additives are in the food?: how is this food affecting the planet and is the food I’m eating, the packaging, or its manufacturing process damaging the plane?; and three, is the food I’m eating harming other people or animals, specifically, was anyone or any living thing exploited in the process of making this food?”

Hadad says it sounds like science-fiction, but the technology to create this transparency is already here.

“Whether it will be adopted or not mostly depends on business agendas, market demand (which is growing) and regulations. Eventually, consumers will drive this change,” adds Hadad.

But Penfold notes that the bigger issue is global food sources and how we will feed the planet 50 years from now.

“I desperately hope that in 50 years, humanity will have developed elegant ways of creating tasty protein, without having to maintain large fields with large vehicles, while using enormous quantities of water,” said Shovel. “This could manifest as vertical farming – perhaps hydroponics, or even ‘aeroponics’ – growing crops suspended in a nutrient-rich mist, with no soil or growing medium.”

“Moving Mountains is anchored by healthier diets, Meatable is grown in a lab but still meat. In developing countries, populations are eating an increased meat-rich diet as they become wealthier, but they can’t rear enough animals and don’t have enough water to keep pace,” said Penfold. “If you can grow meat, you can change all of that.”